Weekly Outlook

Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as Fed taper fears, earnings worries, profit-taking and increasing emerging markets/European debt angst offsets seasonality, investor performance angst and short-covering. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 25% net long heading into the week.

Market Week in Review

S&P 500 1,775.32 -1.7%*




The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,775.32 -1.7%

• DJIA 15,755.34 -1.7%

• NASDAQ 4,000.97 -1.5%

• Russell 2000 1,107.05 -2.2%

• S&P 500 High Beta 29.93 -1.2%

• Wilshire 5000 18,629.80 -1.6%

• Russell 1000 Growth 828.04 -1.5%

• Russell 1000 Value 892.52 -1.6%

• S&P 500 Consumer Staples 432.96 -2.04%

• Morgan Stanley Cyclical 1,402.04 -.5%

• Morgan Stanley Technology 856.68 -2.0%

• Transports 7,086.43 -1.6%

• Utilities 477.81 -2.5%

• Bloomberg European Bank/Financial Services 100.38 -2.4%

• MSCI Emerging Markets 41.12 -1.2%

• HFRX Equity Hedge 1,145.35 +.34%

• HFRX Equity Market Neutral 952.52 +.58%

Sentiment/Internals

• NYSE Cumulative A/D Line 191,104 -1.4%

• Bloomberg New Highs-Lows Index -378 -209

• Bloomberg Crude Oil % Bulls 22.6 -5.92%

• CFTC Oil Net Speculative Position 320,848 +4.3%

• CFTC Oil Total Open Interest 1,661,416 +.96%

• Total Put/Call .85 -1.2%

• OEX Put/Call .91 -69.3%

• ISE Sentiment 130.0 -12.2%

• NYSE Arms 1.22 +40.2%

• Volatility(VIX) 15.76 +14.3%

• S&P 500 Implied Correlation 53.35 +6.5%

• G7 Currency Volatility (VXY) 8.64 +4.47%

• Emerging Markets Currency Volatility (EM-VXY) 9.08 -.87%

• Smart Money Flow Index 11,790.42 -1.11%

• ICI Money Mkt Mutual Fund Assets $2.710 Trillion +.28%

• ICI US Equity Weekly Net New Cash Flow -$1.048 Billion

• AAII % Bulls 41,3 -3.2%

• AAII % Bears 25.0 -9.3%

Futures Spot Prices

• CRB Index 279.67 +.4%

• Crude Oil 96.60 -1.24%

• Reformulated Gasoline 262.93 -3.62%

• Natural Gas 4.35 +5.4%

• Heating Oil 297.57 -2.80%

• Gold 1,234.60 +.37%

• Bloomberg Base Metals Index 191.04 +1.50%

• Copper 331.20 +2.2%

• US No. 1 Heavy Melt Scrap Steel 360.67 USD/Ton unch.

• China Iron Ore Spot 136.0 USD/Ton -2.3%

• Lumber 365.60 +5.7%

• UBS-Bloomberg Agriculture 1,366.44 -.81%

Economy

• ECRI Weekly Leading Economic Index Growth Rate 2.8% -10 basis points

• Philly Fed ADS Real-Time Business Conditions Index -.2301 -11.42%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 120.19 unch.

• Citi US Economic Surprise Index 32.10 -.4 point

• Citi Emerging Markets Economic Surprise Index -15.0 -1.3 points

• Fed Fund Futures imply 34.0% chance of no change, 66.0% chance of 25 basis point cut on 12/18

• US Dollar Index 80.21 -.05%

• Euro/Yen Carry Return Index 147.97 +.61%

• Yield Curve 254.0 -1 basis point

• 10-Year US Treasury Yield 2.86% unch.

• Federal Reserve's Balance Sheet $3.951 Trillion +1.57%
  

• U.S. Sovereign Debt Credit Default Swap 30.28 +.83%

• Illinois Municipal Debt Credit Default Swap 164.0 -2.96%

• Western Europe Sovereign Debt Credit Default Swap Index 56.36 -11.93%

• Asia Pacific Sovereign Debt Credit Default Swap Index 102.04 -3.90%
  

• Emerging Markets Sovereign Debt CDS Index 232.20 -3.05%
  

• Israel Sovereign Debt Credit Default Swap 100.16 -2.76%

• Egypt Sovereign Debt Credit Default Swap 615.0 -1.20%

• China Blended Corporate Spread Index 335.75 -2.0 basis points

• 10-Year TIPS Spread 2.16% +4.0 basis points

• TED Spread 18.25 -.25 basis point

• 2-Year Swap Spread 10.25 +1.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap 1.0 +.5 basis point

• N. America Investment Grade Credit Default Swap Index 69.80 -.25%
  

• European Financial Sector Credit Default Swap Index 97.20 -3.71%
  

• Emerging Markets Credit Default Swap Index 277.20 -5.03%
  

• CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 113.0 +3 basis points

• M1 Money Supply $2.634 Trillion +.68%

• Commercial Paper Outstanding 1,081.40 +3.0%

• 4-Week Moving Average of Jobless Claims 328,800 +6,500

• Continuing Claims Unemployment Rate 2.1% unch.

• Average 30-Year Mortgage Rate 4.42% -4 basis points

• Weekly Mortgage Applications 396.20 +1.05%

• Bloomberg Consumer Comfort -30.90 -.4 point

• Weekly Retail Sales +2.60% -130 basis points

• Nationwide Gas $3.25/gallon -.01/gallon

• Baltic Dry Index 2,330 +7.1%

• China (Export) Containerized Freight Index 1,046.78 -.81%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 37.50 -6.25%

• Rail Freight Carloads 262,765 +26.40%

Best Performing Style

• Mid-Cap Growth -1.2%

Worst Performing Style

• Small-Cap Growth -2.4%

Leading Sectors

• Gaming +2.0%

• Gold & Silver +1.7%

• Airlines +1.7%

• I-Banks -.6%

• Defense -.8%

Lagging Sectors

• Medical Equipment -3.1% 

• Restaurants -3.1%

• Software -3.3%

• Alt Energy -3.5%

• Disk Drives -4.1%

Weekly High-Volume Stock Gainers (14)

• ENTA, UNS, AGX, XLRN, NRF, HDS, SNI, NCS, CUBI, WSTC, PTRY, SYY, DMND and AUXL

Weekly High-Volume Stock Losers (27)

• PBY, TAM, EW, ALOG, LL, INFI, NDLS, FIVE, CIEN, LAYN, CUB, POST, COO, NMIH, LH, RH, IDT, BKS, RSE, NFX, BIG, AFSI, LMOS, SEAC, ULTA, OSIS and RALY

Weekly Charts
ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change

Stocks Slightly Higher into Final Hour on Stable Long-Term Rates, Investor Performance Angst, Short-Covering, Defense/Metals & Mining Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Light

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 15.43 -.71%

• Euro/Yen Carry Return Index 147.75 -.33%

• Emerging Markets Currency Volatility(VXY) 9.08 -.55%

• S&P 500 Implied Correlation 52.39 +1.26%

• ISE Sentiment Index 138.0 -2.13%

• Total Put/Call .81 +15.71%

• NYSE Arms 1.21 +23.0% 

Credit Investor Angst:

• North American Investment Grade CDS Index 69.91 -.34%

• European Financial Sector CDS Index 97.43 -.27%

• Western Europe Sovereign Debt CDS Index 56.36 +.34%

• Emerging Market CDS Index 277.46 +.89%

• 2-Year Swap Spread 10.25 +.25 basis point

• TED Spread 18.25 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap 1.0 +.25 basis point

Economic Gauges:

• 3-Month T-Bill Yield .06% -1 basis point

• Yield Curve 254.0 -2.0 basis points

• China Import Iron Ore Spot $136.0/Metric Tonne -1.38%
  

• Citi US Economic Surprise Index 32.10 +.4 point

• Citi Emerging Markets Economic Surprise Index -15.0 -.1 point

• 10-Year TIPS Spread 2.16 +2 basis points

Overseas Futures:

• Nikkei Futures: Indicating +157 open in Japan

• DAX Futures: Indicating +20 open in Germany

Portfolio: 

• Slightly Lower: On losses in my biotech/tech sector longs and index hedges

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back

• Market Exposure: 25% Net Long

Today's Headlines

Bloomberg: 

• China Pledges to Tackle Local Government Debt Amid Reform. China’s leaders pledged to tackle local government debt next year while creating a stable economic and social environment to promote reforms. The government will maintain continuity and stability in its macro-economic policies in 2014 and stick to a prudent monetary policy and proactive fiscal policy, China Central Television reported, citing a statement from the annual Central Economic Work Conference that ended yesterday.

• Chinese Stock Index Falls for Fourth Day Before Policy Targets. China’s benchmark stock index fell for a fourth day, capping a weekly decline, before the government announces economic growth targets for next year. China Oilfield Services Ltd. (601088) and ZTE Corp. dropped at least 1 percent, leading energy and phone stocks to the biggest declines among industry groups. Cosco Shipping Co., a unit of the biggest shipping group, advanced 1.3 percent as a benchmark of commodity shipping rates climbed for a 14th day. The Shanghai Composite Index (SHCOMP) dropped 0.3 percent to 2,196.08 at the close.

• European Stocks Are Little Changed as Peugeot Shares Slip. European stocks were little changed, with the Stoxx Europe 600 Index posting a second weekly drop, as investors awaited next week’s Federal Reserve meeting, and as gains in AstraZeneca Plc (AZN) offset PSA Peugeot (UG) Citroen’s slide. AstraZeneca rose to a six-month high after a diabetes pill from the company and Bristol-Myers Squibb Co. won the backing of a U.S. advisory panel. Peugeot slumped the most in five years as General Motors Co. said it is selling its entire stake in the French carmaker. RSA Insurance Group Plc plunged 7.2 percent after its Chief Executive Officer Simon Lee resigned as an investigation into accounting practices at its Irish unit forced the company to increase reserves. The Stoxx 600 fell 0.2 percent to 309.75 at the close of trading.  

• Yen Strengthens From Five-Year Low on Fed Views. The yen rose from a five-year low versus the dollar amid speculation on the timing of a cut in the Federal Reserve’s $85 billion of monthly bond purchases.

• WTI Oil Falls to One-Week Low on Fuel Storage. West Texas Intermediate crude dropped to the lowest level in more than a week as falling demand boosted fuel inventories and on concern that the Federal Reserve will curb stimulus. Prices slid as much as 1.3 percent.

• Kids Living in Basements Drag On U.S. Services Spending: Economy. The U.S. economy is suffering a service interruption. Consumer spending on services -- everything from rents and water bills to health care and haircuts -- is a laggard as the economy has recovered from the worst recession since the Great Depression. Such expenditures adjusted for inflation have risen 6.3 percent since mid-2009, compared with a 34 percent surge in outlays on durable goods such as automobiles and appliances, according to data from the Commerce Department in Washington.

Wall Street Journal: 

• China Turns Over Corporate Audit Documents to U.S. Regulators. Related to a Sweeping Probe of U.S.-traded Chinese Firms. Chinese authorities have turned over more audit documents to U.S. regulators regarding U.S.-traded Chinese companies, audit firms disclosed in legal filings, part of a sweeping U.S. probe of suspected instances of accounting fraud. Audit documents regarding at least six Chinese companies trading on U.S. exchanges now have been either turned over to U.S. regulators or are “in the pipeline” to be furnished to the U.S., the audit firms said in filings in an administrative proceeding pending before the Securities and Exchange Commission. As recently as July, only one company’s documents were definitively known to have been turned over.

• Monte dei Paschi Impasse Puts Rescue at Risk. Bank's Largest Shareholder Says It Will Vote Against $4.1 Billion Capital Increase. A clash between the management of Banca Monte dei Paschi di Siena BMPS.MI -3.28% SpA and the bank's largest shareholder threatens to throw into chaos a plan to raise cash needed to stave off its full nationalization. The Monte dei Paschi foundation, a charitable group that is the Siena-based bank's biggest shareholder with a 34% stake, is in financial straits due to the lender's troubles, as well as the foundation's attempts to keep control of Italy's third-largest financial institution.

Fox News:

• Chinese naval vessel tries to force U.S. warship to stop in international waters. A Chinese naval vessel tried to force a U.S. guided missile warship to stop in international waters recently, causing a tense military standoff in the latest case of Chinese maritime harassment, according to defense officials. The guided missile cruiser USS Cowpens, which recently took part in disaster relief operations in the Philippines, was confronted by Chinese warships in the South China Sea near Beijing’s new aircraft carrier Liaoning, according to officials familiar with the incident.Arrest made in attempt to bomb Wichita airport, FBI says.

• Arrest made in attempt to bomb Wichita airport, FBI says. An individual was arrested Friday morning for allegedly trying to bomb the Wichita Mid-Continent Airport in Kansas, authorities said. The federal complaint alleges that the man arrested worked at the airport as an aviation technician and believed he was driving a vehicle loaded with explosives. He was going to use his airport access card to gain access to secure areas in the airport, the FBI said. He planned on dying in the explosion, authorities said.

MarketWatch:

• Investor bullishness looks ‘horrifying,’ according to this chart. (graph)

• Calpers smacks down Icahn over Apple(AAPL) money push.

CNBC: 

• Cashin on 2014: If money gets velocity, look out. (video)

• Amazon(AMZN) said to launch Pantry to take on Costco, Sam's. (video)

ZeroHedge: 

• Nope, No Bubbles Anywhere.

• November Producer Prices Decline For Third Consecutive Month, Rising Pork Offset By Falling Chicken Prices. (graph)

• Mark Spitznagel Slams The Fed For Creating The Rich-Poor "Chasm".

• European Stocks Slump To 2-Month Lows (Biggest 2-Week Drop In 6 Months). (graph)

• Iran Quits Nuclear Talks After US Expands Blacklist Sanctions.

• "X" Marks The Spot Of US Cognitive Dissonance. (graph)

Business Insider:

• Here Are Pictures Of Cairo In The Snow — Something That Hasn't Happened In 112 Years.

the hedgefund journal:

• HFR: Hedge fund launches fall. New hedge fund launches declined to the lowest level in nearly three years in the third quarter, while the number of hedge fund liquidations rose to the highest level since the fourth quarter of 2012, according the latest HFR Market Microstructure Industry Report, released by HFR. The trends in launches and liquidations occurred in Q3 as US regulators proceeded toward approval of the Volcker Rule (which was approved this week), while launch trends have not been significantly impacted by the recent relaxation of hedge fund marketing restrictions associated with the JOBS Act.

Reuters: 

• FDIC'S Hoenig says Volcker rule may help bank splits. A new U.S. rule banning banks from making big trading bets with their own money could help efforts to split commercial banks from broker-dealer activities, a top U.S. regulator said on Friday. 

• U.S. FHA says facing $1.3 billion capital shortfall. The Federal Housing Administration, which recently received an infusion of funds from the U.S. Treasury to cover projected losses, said an audit of its finances has found it still faces an expected $1.3 billion capital shortfall. 

• Europe faces moment of truth on banks, with flawed defences. Europe's banks face a moment of truth next year when health checks will spell out the repairs they need. The trouble is that fixing them could require cash-strapped governments to borrow more, often from the very banks that need their help.

• Fed pullback concern boosts dollar, pressures stocks. The U.S. dollar touched a five-year high against the yen and rose against the euro on Friday, while global equity indexes slipped on growing concerns the U.S. Federal Reserve could surprise investors by scaling back its stimulus as early as next week.

USA Today:

• Amazon(AMZN) said to launch Pantry to take on Costco, Sam's. Pantry is set to launch in 2014 and will let Amazon Prime members buy consumer packages goods that will be shipping in a set sized box with a maximum weight limit, sources say.

Telegraph: 

• Bank of America(BAC) advises China default contracts to hedge debt storm. Chinese bond yields have already risen to the highest in a decade yet markets remain “complacent” about the implications. Bin Yao, the bank’s credit strategist in Asia, said Chinese bond yields have already risen to the highest in a decade as the authorities seek to rein in rampant growth of the M2 money supply and excess credit, yet markets remain “complacent” about the implications.

The Globe and Mail:

Restructuring: Flowers slams Europe over inaction


While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3211790/CurrentIssue/88924/Restructuring-Flowers-slams-Europe-over-inaction.html?copyrightInfo=true

• Ottawa to designate crude oil as highly dangerous. The federal government will, for the first time, designate crude oil a highly dangerous substance and introduce tougher safety and testing measures for shipping oil by rail, Transport Minister Lisa Raitt has told The Globe and Mail.

Echoing fears that European policymakers remain in a state of cognitive dissonance – recognizing the need for root-and-branch overhaul of peripheral banks, but backtracking on joint liability plans – Christopher Flowers, the legendary FIG investor who now runs the £2.3 billion ($3.5 billion) private equity group JC Flowers, sounded the alarm over the negative sovereign-bank feedback loop. In a shot across the bows of market bulls, who cite the return of capital flows to weaker eurozone states, Flowers issued a stark warning: "There is a scenario where we have a Lehman-type event: we wake up some Thursday and a big country is in trouble. "And the ECB will have to decide to support banks x, y, z. And then the ECB will, in fact, decide to own bank x, y, z.


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Bear Radar

Style Underperformer:

• Large-Cap Growth -.06%

Sector Underperformers:

• 1) Energy -.94% 2) HMOs -.61% 3) Biotech -.40%

Stocks Falling on Unusual Volume:

• DAR, APC, TCPC, RH, INSY, WGP, LULU, WES, SATS, DGLD, OPEN, VOC, SODA, GIMO, CNSI, XLS, AVK, AMCC, CQP, ADT, ESS, GDP, EOG, BP and EMN

Stocks With Unusual Put Option Activity:

• 1) ADBE 2) CTB 3) DISH 4) SYMC 5) CMCSA
  

Stocks With Most Negative News Mentions:

• 1) APC 2) CA 3) LULU 4) UTX 5) IBM
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume